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Perdue Bringing “Solyndra” Politics to North Carolina

Documents obtained by the Civitas Institute suggest Gov. Bev Perdue is attempting to strong-arm North Carolina’s three major utility companies into supplying more expensive energy to their customers in the northeastern part of the state. In a political power-play to reward big business reminiscent of the handling of the Solyndra debacle that embarrassed the Obama administration, Perdue is urging for special treatment that would secure a $200 million federal government subsidy for a multi-billion dollar Spanish company.

Perdue recently sent a letter to the heads of Duke, Dominion, and Progress Energy stressing the importance of the proposed Desert Wind Power Project in Elizabeth City to be built by Iberdrola Renewables (to see copies of the letters, click the links below). The Project involves the development of a 300 megawatt wind energy farm. In her letter, Perdue stated: “I urge you to give serious consideration to partnering with Iberdrola Renewables to make the Project a reality.” Perdue also added that it is urgent that a major utility provider agree to purchase power from the wind farm in order for it to be a “long-term success.”

Small problem: North Carolina’s major utility companies already said no to purchasing electricity from the wind power project because the rates Iberdrola were demanding are so much more expensive than the conventional energy currently being used by the utilities. As quoted in a recent Raleigh News & Observer article, Duke spokeswoman Betsy Alley Conway said, “What we are looking for is wind energy at a price that is cost-effective for the company and our customers. If we receive a proposal from developers that is a good value for our customers and our company, we would execute the contract.”

Translation: Iberdrola’s expensive wind energy would force us to hike rates on our consumers too much – so no thanks.

Perdue’s urging utility companies to provide even more expensive energy to consumers appears particularly out-of-touch in light of recent protests of a moderate rate increase approved by Duke Energy. State Attorney General Roy Cooper also publicly denounced Duke’s rate increase in a press release, declaring: “Now is not the time to ask North Carolina consumers to pay significantly more for electricity.”

Iberdrola Renewables is the U.S. arm of the Spanish “renewable energy” corporation, Iberdrola, S.A., a massive company with a presence in more than 40 countries and global revenue exceeding $40 billion.

Despite such massive revenue, in order for the new Desert Wind Power Project to be a “long-term success,” Iberdrola is counting on a $200 million federal subsidy to help finance the $600 million project. In order to be eligible for this handout, Iberdrola needs to begin work on the project before the end of this calendar year. Without an agreement from a large utility company to purchase the energy generated by the wind farm, however, Iberdrola will not proceed with construction.

In short, Perdue’s letter is meant to apply political pressure on the utilities to purchase expensive energy from the wind farm. As a result, the highly profitable foreign energy company would collect nearly a quarter billion of taxpayer dollars and impose more expensive energy bills onto northeastern North Carolina homeowners and businesses.

According to North Carolina Secretary of State records, Iberdrola has three active registered lobbyists in the state, two of whom registered earlier this year. No doubt, these agents have spent countless hours applying pressure on state lawmakers and the Governor to gain support for the Elizabeth City wind farm.

In Perdue, it appears they found another politician willing to use her political power to further enrich a highly-profitable, giant corporation at the expense of average taxpayers and ratepayers.

With these letters, Gov. Perdue yet again shows her true crony capitalist colors. Time and again, she uses political power to benefit politically-connected corporations – at the expense of taxpayers, small businesses and in this case, energy consumers. Anytime she attempts to position herself as being in favor of “the little guy,” remember the case of Iberdrola. Perdue will gladly throw the little guy under the bus if it means an opportunity to shower deep-pocketed corporations with more taxpayer money. Making matters worse in this instance, her actions would also force up the bills of struggling energy consumers.

When asked via email if Perdue’s actions indicate her disagreement with Cooper’s stance that “now is a bad time to raise rates on energy consumers”, the Governor’s office did not respond. Her silence speaks volumes.

UPDATE (12/15/11): According to a report in the Charlotte Business Journal, Iberdrola has announced they will not begin construction on the Desert Wind Power Project in Elizabeth City due to their inability to come to a purchase agreement with a major utility provider.

In 2006, the State of NC impulsively purchased 600 acres of land in Southport, nestled between a twin tower nuclear power plant and the largest military munitions depot in the world (MOTSU). They spent $30 million on the land with the idea to build a massive international container port, 23 miles downstream from the Port of Wilmington. That land is now worth $12.5 million, according to Brunswick County Assessors.

Having never bothered with a cost/benefits analysis before buying the land, they have since spent an additional $10 million on studies to justify the initial purchase with studies that should have been done before the investment was made. Then there’s the $9 million spent to service the debt, since the money was borrowed. And what have we all learned as a result?

The Port of Wilmington (POW) operates at below 50% of their 600,000 TEU capacity and only captures about 20% of all NC imports and exports. 80% go to competing ports in neighboring states. The Port of Wilmington has the lowest handling rates on the Eastern Seaboard and offers generous tax credits to NC companies who use our ports and yet, our businesses go elsewhere and our ports are taxpayer subsidized and bleed millions every year.

Long ago, there was a private partner interested in the project. Centerpoint Properties. The partnerhship lasted only as long as it took Centerpoint Properties to perform their own cost/benefits analysis. Since they are for profit company and not in the business of making charitable contributions to the State of NC, they gracefully bowed out. Since then, there is no one in sight that will conjoin with the NC State Ports Authority to risk their money on a losing venture.

Who stands to gain from this? Certainly not the taxpayers of NC. And not our importers and exporters. Are the Governor’s campaign contributors gambling they’ll make money on this? What about Jim Bradshaw, Economic Development Director for Brunswick County who touts a project that’s officially “on hold” to lure business to the State of NC. What are his interests in this?

Great article. Thanks for bringing this to our attention. Of course the elephant in the room is North Carolina’s bipartisan supported renewable portfolio standard legislation, SB3, passed in 2007. If it weren’t for SB 3, which forces utility customers in the state to buy wind power in the first place and gives the utilities the right to pass the higher costs on to rate payers, none of this would be an issue. The real culprit is not so much the financial subsidies but the mandate that requires us to purchase expensive and unreliable energy generated from sources like wind and solar. The hypocrisy is that Duke Power, in collusion with radical environmental groups, was a driving force behind this legislation and is probably the main reason that Republicans are unwilling to support any effort to repeal it.

[…] what is supposed to be an independent state office should come as no surprise. Just last week, I wrote about Perdue’s attempt to pressure major utility companies in the state to buy expensive wind […]